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Online sales stage a recovery but retail sales show longest decline since 2011: CBI

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Retail sales fell for the third month in a row, although online sales have shown a recovery, according to the latest figures from the CBI.

The business organisation survived 93 firms, including 46 retailers, for its latest CBI Distributive Trades Survey. It found that sales volumes fell in the year to July, marking the longest period of decline since 2011. However, July’s decline was less marked than that shown in June.

Orders placed with suppliers were also down for the third consecutive month, albeit at a slower pace than the previous month. Both sales and orders are expected to be broadly flat next month.

Online sales, however, showed an upturn, after staying flat in the year to June. But internet growth is still below the long-run average (+39%) and is expected to be slightly lower in August (+35%). Both figures remain below the long-term average (+46%).

Across sales channels, grocery sales rose, but sales fell in department stores, clothing and goods such as jewellery and flowers.

Rain Newton-Smith, CBI chief economist, said: “Whilst last year’s summer strength in retail sales is driving some of the comparative weakness this year, it is still hugely concerning that sales have fallen for the longest period in almost eight years. Despite the recent pick-up we’ve seen in households’ real earnings, the sun is clearly not shining on the British High Street.

“The UK economy has reached a fork in the road. The new Prime Minister must now do everything in his power to achieve a good Brexit deal, thus protecting jobs and our economy.”

Some 26% of retailers said sales volumes were up in July, compared to the previous year, while 42% said they were down, giving a balance of -16%. A balance of -3% expected sales volumes to increase net month, and a balance of -19% placed more orders with suppliers than they did a year ago.

Wholesalers reported no growth in sales on a year ago, but a small pick-up is expected in the month ahead. Motor traders also saw a third consecutive month of falling sales, with a similar decline expected in August.

The CBI describes volatile growth across the first half of 2019, marked by companies stockpiling and uncertainty ahead of previous Brexit deadlines. It expects the economy to grow modestly further ahead, though says a no-deal Brexit would likely hit activity and financial markets significantly.

Image: Fotolia

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